Will S.E.C. Snafu Mean Millions for N.Y.T. Benefits Fund?

Looks like the The New York Times Company is next in line to feel labor pains.

On Monday, Nov. 19, a representative for TheTimes called the New York Newspaper Guild, which represents 1,300 Times employees, and agreed to discuss the quickly depleting reserves in the Guild-Times Benefits Fund, which covers employee health care costs, said Bill O’Meara, president of the guild. Both sides have been aware for many months that the benefits fund is in need of attention, but talks have been stalled.

This time around, though, there’s more at stake than a simple cash transfusion. As these negotiations proceed, a single fact will be key: Did an error made by The Times earlier this year in an S.E.C. filing regarding a pension fund cost TheTimes a major bargaining chip in its negotiations over benefits?

According to the guild, the benefits fund will run dry by December 2008. In order to rescue it, the guild requested that The Times pitch in a little extra. Naturally, The Times, which produced a razor-thin profit margin last quarter, doesn’t have much extra of anything to throw around.

Still, The Times offered to help, but only if certain conditions were met. Management sent a list of requested changes that the guild said amounted to a “wholesale revamping” of the eight-year agreement the two parties signed in 2003. Requested changes, according to the guild, included firing reporters over “editorial differences” and adding extra hours without the benefit of overtime pay.

It appeared The Times was in a perfect position to get what it wanted until the guild noticed that The Times slipped up in a matter regarding the pension fund, which is also administered by the guild.

In this year’s annual filing with the S.E.C., The Times released information saying the company had improperly classified the pension plan and that, as a result, there would be an increase of $107.5 million in liabilities to their balance sheets. The Times had classified the plan as a “multi-employer” plan when it should have been listed as “single-employer.” Although the plan covers guild-covered employees at WQXR and NY Times Digital as well as newspaper workers, the Times plan is actually a “single-employer” plan, as it only pertains to one company: The New York Times Company.

When the error was reported, the guild suddenly saw a chance to even the playing field and help its drained medical funds. “It turned into an opportunity,” said Bruce Lambert, a metro reporter who is a vice chairman for the guild.

Or, put more bluntly: “Look, it’s leverage,” said Mr. O’Meara.

After an investigation by the plan’s actuary, Watson Wyatt Worldwide, it reported to the guild that as a single employer The Times would owe $27.3 million to the fund in payments for this year and retroactive to last year. In a statement, The Times did not dispute these figures; but in an e-mail to Off the Record, Times head spokeswoman Catherine Mathis said: “It has not been determined that the fund must be reclassified for funding purposes. The accounting regulations differ from the funding rules.”

She suggested that the reporting error would have more of an effect on “the timing of the contributions rather than the amount paid,” she wrote. She would not elaborate.

Mr. O’Meara told Off the Record that he will propose a plan that would essentially free The Times from the burden of paying the extra costs calculated by Watson Wyatt Worldwide. As an alternative, he argued, he’d prefer The Times pay an increased percentage of medical costs—what he estimated to be about $4 million a year, with increases over the next few years—instead of giving anything more to the pension plan.

Under his proposal, the guild could actually fix The Times error by classifying its plans as multi-employer. Mr. O’Meara said he would bring in another partner to join the Times Company in the fund (say another newspaper, or radio station), to ease the burden of putting money into the benefits fund.

Naturally, they see it as a “win-win.” (It’s certainly a better hand to play than just crawling to The Times complaining that the fund has gone broke.)

The Times thinks otherwise. When asked whether the company had lost its advantage, Ms. Mathis wrote, “We do not believe that the restatement will have any effect on the upcoming guild negotiations.”